Macy’s Is Bad, It’s Nationwide
By George Anderson
Goodbye Famous-Barr, Robinsons-May, Foley’s, Hecht’s and Kaufmann’s. It was nice knowing you Filene’s, Strawbridge’s, Meier & Frank and L.S. Ayres.
Federated Department Stores announced it will convert 330 stores it acquired from May Department Stores to the Macy’s banner. The move will give Macy’s 726 stores, making it the largest department store chain in the nation.
“Customers have told us they want the fashion and affordable luxury they find in Macy’s stores. We have strengthened the Macy’s brand with distinctive assortments, simplified pricing, an improved shopping experience and enhanced marketing. With this expanded geographic coverage, we now will be positioned to nationally advertise the Macy’s brand,” said Terry Lundgren, Federated’s chairman, president and chief executive officer in a released statement. “And with additional Macy’s stores, more customers than ever will benefit from our Macy’s Star Rewards customer loyalty program, gift cards that can be used across the country and a nationwide wedding registry.”
Kenneth Bernhardt, marketing department chairman of the Robinson College of Business at Georgia State University, told USA Today the move by Federated to the Macy’s banner is not without risk. “They have to minimize vulnerability to losing the loyal May customer,” he said.
Federated’s Lundgren said the department store chain has taken consumer feelings into consideration. “We respect that May Company’s regional store names are deeply rooted in their communities, we appreciate the heritage and traditions associated with those names, and we expect to continue to play an important role in the communities where our customers live and work,” he said. “At the same time, we also have learned from our own experience converting Federated’s regional nameplates. Our customers tell us through research and from their behavior that what’s inside a store – the merchandise, the service, the people, the shopping environment – is what matters most. And this is where Macy’s excels.”
The fate of two other May banners, Lord & Taylor and Marshall Field’s, has not yet been determined. Mr. Lundgren told USA Today he wanted to learn more about the respective brands before making a decision.
Speaking of Lord & Taylor, he said, “I want to know more about their vision for that brand: Can it stand alone?”
As for Marshall Field’s, Mr. Lundgren said he was “trying to be very respectful” for the brand’s name and the loyalty that consumers have for the Chicago-based department store.
A Web site, www.KeepItFields.org, recently went online to help save the Marshall Field’s name.
Moderator’s Comment: What is your assessment of where Federated is going with its acquisition of the May Department Store businesses?
– George Anderson – Moderator
- Federated Announces Plan to Expand Macy’s
Brand in 2006; About 330 May Company Stores to Convert to Macy’s Nameplate Following Merger – Federated Department Stores/Business Wire - Some famous store names to disappear – USA Today
- Battle to preserve Field’s name makes its way to the Internet – Chicago Sun-Times
- Save Marshall Field’s, KeepItFields.org – http://www.keepitfields.org/
I think there is a big difference between an emotional, nostalgic attachment and a shopping habit. One is emotion and the other is action. It’s optimal when the two can combine, since they can reinforce each other tremendously.
MF and Dayton’s, both, have excellent emotional attachments for the people who are natives in their respective hometowns. However, both firms have been losing market share for a generation, at least. That 14-story building downtown has MUCH underutilized space. Both companies experienced a parade of changing executives who tried to reverse the market share losses. They all failed. People love the “old names” but they spend more and more elsewhere.
Whether Macy’s keeps various names or not, the innovation and excitement of the department store experience has not been a motivator since the early 1960’s, as far as I can tell. Department store executives thought they were geniuses since they built successful suburban stores in shopping malls. What innovation did department stores exhibit after that?
Terry is doing what’s necessary… for the long-run, given our brand-intensive retail environment. Terry has always been a forward thinking merchant (I once worked with him at Bullock’s), and although as an old Bullock’s man, I would have rather seen Bullock’s go national… Macy’s is probably the best brand to do it with. Rowland Macy would be proud!
Some of the commentary today is vastly amusing. Ladies and gentlemen, for the most part, the emotional place of a department store in the social structure of a community has been significantly reduced. I, too, lived for some time in Chicago. And the Marshall Field’s events were fun. But, of course, they would still be fun if they were Macy’s. It’s the event that mattered, not the name on it. The State Street windows, the Christmas tree, and so much more….please.
Terry Lundgren correctly saw over three years ago that the future for his company lay in creating a national department store chain. It was only with the volume and economies consistent with that size that his operating ratios could reasonably be expected to meet objectives. So many aspects of running a retail operation are leverageable. Supply chain, product development, advertising, distribution, IT infrastructure, back office functions….these all leverage with additional volume.
From a merchandise assortment standpoint, let’s not panic. Federated continues to be as close to state of the art in planning and assortment technology as any retailer. They have very sophisticated software for clustering stores on the basis of customer behavior, demographics, lifestyle selections, shopping similarities, competitive profiles…the matrix is almost too much. Just because they have the Macy’s name, do not assume that a Macy’s in Southern California will look like one in Baltimore. It will not. It cannot. And Federated already knows this.
The move is appropriate, it is expected, and it means absolutely nothing about the needs of the consumer being met in a poorer fashion.
Being a Chicagoan, I can vouch that everyone from Mayor Daley to Roger Ebert have expressed their distaste for Lundgren and his glorious ways of wanting to get rid of Marshall Field’s. Us Chicagoans have been talking about this everywhere, from the bank line to the gas station to the pharmacy….WE ALL SAY THAT WE DO NOT WANT THE NAME CHANGED AND WE WON’T SHOP THERE IF THEY DO. It’s the general consensus of amateur and professional polling around here. Yeah, it’s a good business decision…..but it will kill the Field’s stores here in Chicago. In fact, State Street will probably have an empty 14 story department store.
I guess if they change the name, we will all have to start shopping at Nordstrom or Carson’s….NO FEDERATED STORES IF THEY MURDER OUR FIELD’S!!!! In fact, where are these independent surveys they are sending out to Field’s customers? I have a Field’s charge which I use frequently, but calls to the Federated office have not been returned when I inquired about being included in the Marshall Field’s survey? Does this survey even exist? Tons of Chicagoans, myself included, are FURIOUS at Lundgren’s arrogance and ignorance of Marshall Field’s. Macy’s is great in its respective markets but leave Field’s alone!
Macy’s has doing a markedly better job building its brand and marketing to its customers this past year. May would be doing itself a great favor to get under their Macy’s brand banner.
The past few months in CA, I’ve noticed great new print ads and have even received a couple of phone calls from the store manager!! …with an invitation to a special sale and, if I used my Macy’s credit card, I got an extra deal as a better shopper. Now that’s real customer service that Macy’s NEVER did before and has now started to do. Used to be just Nordstrom would call me.
The people at the stores seem better trained and more friendly too. At least out here in Macy’s West.
Don,
You can speak all you want about the business and technical ends of this situation, but Marshall Field’s has a whole heck of a lot more of importance to the retail world than the smaller chains of May Department Stores.
Corporate leaders: Don’t inflict changes on us Chicagoan’s or you will pay the price of lost sales….Just look at what happened to Dominick’s when Safeway came in and screwed up their product offerings and customer service.
The name change makes sense. Here in Minneapolis, when Marshal Field’s took over Dayton’s and changed the name, there was much wailing and gnashing of teeth. Dayton’s was a major part of the community; the name is still so powerful that one of our current Senators was recently elected in part on the power of his last name, Dayton.
However, after an initial backlash, Marshal Field’s is doing fine in the Twin cities. They don’t have the community power that Dayton’s did but most consumers continue to shop there with only slightly less loyalty. My kids don’t even remember the name Dayton’s.
The business model makes to much sense to ignore.
As a resident of Denver, I can’t wait for the Foley’s name to disappear. May rebranded May-D&F stores as Foley’s in 1993 (ironic, as May was founded in Colorado before its move to St. Louis), after having swallowed up The Denver Dry Goods in 1986 with its purchase of Associated (which merger also gave it Lord & Taylor) and after having swallowed up the more upscale Daniels & Fisher in 1957. We miss those names.
The Macy’s name will be a fresh start in this community, at least–longtime residents (of which there are few) will see it, accurately or not, as slightly more upscale than Foley’s, and the many people who have moved hear from the east or from California are more familiar with Macy’s than with Foley’s (former Texans are another matter). But Macy’s will have to do something to bring younger shoppers back into the Foley’s locations.
Lord & Taylor should return to its roots (I agree with the earlier posting). Marshall Field’s should remain separate, and be tweaked to be noticeably more upscale than Macy’s (but not as edgy as Bloomingdale’s), and perhaps be used as a brand only in Illinois. Former Dayton’s or Hudson’s stores may as well now be called Macy’s. Federated would then have four clearly distinct formats to appeal to different kinds of shoppers, and mall owners would have fewer vacant anchor spots.
From a Southern California perspective, Rob May won’t be missed. They blended into the scenery with unexciting merchandise (and very moderate), bland stores, sale after sale (why buy at regular price?), sloppy and messy. I, for one, stopped shopping there years ago because I couldn’t find good quality and fashion forward clothes for a professional woman (with a large budget).
Macy’s is a huge upgrade from May – and let’s not worry that the May customer will disappear from the malls; she will go to Macy’s because, most likely, she already does. Customer loyalty these days is overused and misunderstood. I can be loyal to many retailers (Target, White House Black Market, Nordstrom, Macy’s) and by not shopping at others (Wal-Mart, May).
I highly doubt that most will notice the May signs coming down.
Even though a brand name may have some equity, the best way to make money is to embrace the fact that many customers are not easily fooled for any significant length of time. Most May stores I’ve visited recently have, to a dominant extent, very similar assortments (brands, items, styles, merchandise mix) to each other and to Macy’s and Bloomingdale’s, as well. Department stores can be easily merged at reasonable cost because they are so similar.
Using many of the same procedures, market positioning, brands, technology, locations, ad media — how hard can a merger be, from the management as well as the customer point of view? And what good is a brand name if the item, service, assortment, quality, and style are NOT distinctively different?
MF and L&T are very similar to all the rest of the FedMay outlets. However, the names might be profitably kept if:
a. the parent company really wants to use the names to create something special and/or
b. there are profitable real estate locations FedMay doesn’t want to give to the competition, yet are so close to other FedMay outlets that keeping the same brand name would be suboptimal. For example, at one point I worked for a company that had all these names for bookstores: Doubleday; Barnes & Noble; B Dalton; Bookstop; Bookstar. There were malls that insisted on having more than 1 bookstore, or that had radius restrictions, so the extra names came in handy.
On the one hand, the market research Fed has done seems to make sense. Why not convert the old, tired banners over to Macy’s? As Mark says, there’s not much difference in the selection or customer service anyway. But come on! Here Federated sits, now practically owning the declining, bland, mid-tier department store segment, and the choice in direction is towards further homogenization. At every turn, Federated chooses the conservative path, while innovators from the discount, specialty apparel and luxury channels steal market share. Why not take one of the old banners and turn it into a hip department store for younger generation shoppers? Or convert urban locations to banners targeting Hispanics? The Macy’s change-over may keep the mid-tier segment from sliding too quickly in the short term, but an investment in the future of the channel would seem wise. And that’s going to require some vision, not just going for what’s safe for the next 3 years.
Take over companies; ruin consumer loyalty, shopping experience, and Brand equity. Macy’s is looking at this from only its P&L position.
Oh well. And we want loyal shoppers to frequent a non established named business that is substituted for a well known, locally established Brand name and company. Ouch! Hmmmmmmmmmmmm!!!
Federated should keep the Marshall Field’s and Lord & Taylor brands alive as complements to Macy’s and Bloomingdale’s. As multi-generational customers of both MF and L&T, I can assure you that my family’s business would not move from either store to Macy’s should they switch nameplates. We would go to Nordstrom, specialty retailers, or the Internet. Macy’s, Bloomingdale’s, and Lord & Taylor in a mall in the northeast could be a great line-up of complimentary stores, especially if L&T could return to it’s classic American roots and capture the more affluent, traditional customer who is not at home with Macy’s merchandise/service nor Bloomingdale’s euro-edginess.
The department store industry is rapidly becoming a “brilliant shade of gray” where all stores bear the same name, carry the same merchandise, same promotions, same pricing, same everything. There is no longer a differentiation or choice for the consumer. Although the Chairman of Federated claims this is what the consumer wants, I would argue that no one wants to surrender their right to choose between stores and brands. We are rapidly moving to a form of socialized retailing in which only the strongest will survive and where the survivor will mandate what they believe shoppers want and need. The march to one-brand has left untold millions of shoppers without a sense of tradition or community that will ultimately result in either total consumer apathy or total dissatisfaction, which in turn could trigger a rebirth of true specialty store retailing that will force the remaining department store survivor to reconsider their decision to create a national monolithic empire.
As barely mentioned in other comments, us Texans see Foley’s as THE leader in retail sales. The Foley’s Red Apple Sales, couponing and customer service are legendary. Macy’s is seen as an expensive alternative, with fewer ‘sales’ and promotions, and poorer customer service. The change to Macy’s will drive the ladies to other retail alternatives!
In an earlier post, on a similar subject, I noted that, yes, as a pure business driven decision, the change-over of May nameplates to the Macy’s/ Bloomies brands makes sense, if only viewed through the prism of corporate strategy/management objectives. However, the strategy starts to fall apart once you mix in the intangibles that make retailing the invigorating/infuriating industry that it is….those being image, identity, attitude, style, brand loyalty, and a host of other softer categories that just don’t show up on an MBA’s spread sheet and a bean counter’s books!
I was heartened by Federated’s decision to not kill Lord & Taylor, and since May Co. shrank it back to its core stronger markets, L&T has a chance for a revival, or potentially a spin-off to different owners who might be able to polish and revive this storied, if now diminished brand.
With that in mind, Federated needs to seriously think about maintaining Marshall Field’s. Not only in Chicago, but in the twin cities and metro Detroit, where M-F’s has already become well regarded in only four years. In fact, to strengthen its potential, I would also extend it out to St. Louis and Indianapolis, rather than roll out Macy’s. Macy’s is just not a respected name out there, and in the case of customer loyalty, from all the press and heat this subject has generated so far, I would bet that (especially) Chicagoans regard M-F’s the way they do their sports teams. In other words, don’t screw with ’em.
The only argument that Federated has is this tunnel-visioned, geeky, MBA-esque strategy of building a nationwide chain of only Macy’s and Bloomingdales. Great thinking, if that is the only game you see, and it might only have a shelf life of 3-5 years, and then what?? To kill M-Field’s would do a great disservice to the potential of what a midwest-focused line could achieve. This brand, far beyond any of the other May divisions, has a cachet, history and brand loyalty that has clearly outlasted the sorry changes that have rocked the rest of the department store industry. To throw it away, only to appease Wall Street or as a way of cost containment from a richly priced merger deal, is not responsible corporate governance. Dig further into this, and you start to realize that this merger is really about bonus and stock option potentials, and building Macy’s into a mid market Wal-Mart. You cannot replicate the energy of Macy’s NYC or SF in 90% of the locations that they seek to try. Why ruin M-Field’s with this same compulsion?
If Federated goes through with this, it reeks of arrogance. Especially in the case of M-Field’s, alienate the customer at your own peril.
I agree with the earlier poster about Lord & Taylor. I feel nostalgic about this brand the way others are about Marshall Field’s.
I’m surprised that May decided to close all these Lord & Taylor stores, some of which are only a couple of years old. I would assume these stores, with the marble floors and woodwork, are more expensive to build than a TJMAXX, Marshalls, or even a JCPenney. Another good point I heard about is a lot of divested stores are in the South, where a lot of the population growth is.
I think one of the problems with L&T is that it has dropped product categories. My mom was looking for bed sheets when she realized that L&T no longer carried those items, just “giftware.” I even read L&T used to carry furniture. Maybe L&T could offer electronics, stationary,
gourmet food, toys, etc. The Wall Street Journal reported upscale chains like Saks have started expanding product categories as the market for designer clothes has stagnated.
I also think L & T failed to capitalize on the growth of personal care items. It could benefit from offering some cosmetics open-stock. Putting everything behind a display-case turns people off. The brands it carries have failed to keep up with the latest trends in personal care. My own 50 year old mother has started buying personal care products at Victoria’s Secret and Bath & Body Works. Furthermore, I also think L & T could offer a better website. You cannot even buy products online at the L&T website (in contrast to Nordstrom).
I also read somewhere that its lack of a juniors department hurt L&T. I’ve been in Nordstrom and, whereas the rest of the store is calm, with live piano music playing in the background, the juniors section has neon lights and a screen playing music videos. Lord & Taylor needs to market better to young people.
Even I, a 20-something male, would rather buy clothes at a department store than Wal-Mart or Target. In short, I hope Federated will either keep the Lord & Taylor brand or sell it to another company. I will be sincerely disappointed if these chains were to be folded into Macy’s.